Personal Loan Rates Won’t Jump After Fed Rate Hike

“They’ve already priced in this U.S. Fed increase”.

On Thursday (Dec 15), the U.S. dollar rose as much as 1.4 per cent against the Singdollar to 1.4436 and was trading 1 per cent up as of 2:25pm.

“We feel the 25 basis points increase was nearly fully priced in and didn’t take market participants by surprise, but the strong market reaction is due to the new Fed projections for 2017, which showed the central bank now expects three rate hikes for 2017 rather than only two factored in by the market in September”. Overall delinquencies have risen slightly as of the most recent quarter, reflecting weakness in some segments of consumer borrowing. Trump called it a “false economy” during his campaign.

The moderate economic expansion, continued strengthening of labor market and the improvement in inflation condition supported the central bank to raise interest rate after almost a one-year pause, according to the statement.

The Fed’s new projection has the unemployment rate dipping to 4.5 per cent by the end of 2017 and remaining at that level in 2018.

In Asian trading the Australian, Canadian and New Zealand dollars all suffered losses, as well as the Mexican peso.

“Yet, the accompanying statement could trigger some volatility, as it will set the primary tone for the future of the USA monetary policy and will certainly not be as hawkish as priced in by the fixed-income and the currency markets after Trump’s victory and on the runup to this week’s meeting”, she said.

“The recent increase in rates has led to a clear slowdown in refinance activity that will impact both the fourth quarter and 2017”, William Rogers, chief executive officer of SunTrust Banks Inc., said at an investor conference in NY last week.

Zillow and other industry watchers say mortgage rate increases have more of an impact in costly home markets, like San Diego County.

USA stocks, which fell on Wednesday following the Fed meeting but bounced back on Thursday, eased again on Friday and the S&P 500 was on track for a slight weekly decline. “It should be beneficial to revenue and earnings because your adjustable-rate and floating-rate assets will reprice higher and banks will lag in terms of increasing what they pay out”. Moreover, Britain’s shock vote to exit the European Union in June dissuaded the Fed from raising rates later in 2016.

The Bank of Korea gave a taste of the challenges many EM economies face.

That had been the first increase since the global financial crisis of 2008-09. Traders told Reuters that China’s big state-owned banks were intervening heavily in the market to prevent the yuan falling too far from the central bank’s daily fix of 6.9289 yuan per dollar.

The euro was steady at $1.0410 after hitting $1.0366 overnight, its lowest since January 2003.

SNB introduced negative interest rates in January 2015 to weaken the Swiss franc and bolster the country’s exports. A rate hike is a sign that the USA economy is improving.

Among commodities, Oil prices stabilized as a tighter market looms in 2017 due to planned output cuts led by OPEC and Russian Federation, after sharp declines earlier following the Fed’s action. Benchmark U.S. crude fell $1.94 to settle at $51.04 per barrel in NY. It dropped $1.94 a barrel on Wednesday.

“The outlook for gold is not particularly great”, said ANZ analyst Daniel Hynes.

The important takeaway from all this is that it is really not clear what the Fed will do next year. “The selling seen this morning is just the start of things to come”.